Trump announces 25% tariff on Chinese imports

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Trump announces 25% tariff on Chinese imports

Many economists correctly argue that a trade deficit is not a good indication of how the USA economy is doing - especially given that the US trade deficit tends to rise when the economy is strong.

The measure will affect goods that "contain industrially significant technology", Trump said on Friday, as he highlighted that the action comes "in light of China's theft of intellectual property and technology and its other unfair trade practices".

China's Ministry of Commerce has accused the U.S. of launching a trade war and said Beijing will immediately introduce tariffs on American exports on a similar scale.

China opposed this move saying, "The US move violates the relevant rules of the World Trade Organization, goes against the consensus already reached in bilateral economic and trade consultations, seriously infringes upon the legitimate rights and interests of the Chinese side and undermines the interests of China and its people".

"Technology and innovation are America's greatest economic assets and President Trump rightfully recognises that if we want our country to have a prosperous future, we must take a stand now to uphold fair trade and protect American competitiveness".

By selling more to other countries, farmers might be able to make up for most product sales lost to price increases in China, agricultural economists say.

China had previously said it would respond to American tariffs on $50 billion worth of Chinese exports with retaliatory tariffs on $50 billion of United States products such as cars, aircraft and soybeans. The Chinese haven't issued a list but have stated it would be an identical 25% on $50 billion of American exports.

Trump has long complained about China's huge trade surplus with the United States.

A set of retaliatory tariffs announced by China on Friday includes a plan to tax imports of American lobster, potentially jeopardizing one of the biggest markets for Maine's signature seafood.

New tariffs on imports from China may leave American companies with a choice - pay a higher freight bill now or pay the tariffs starting in three weeks.

"The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions", the U.S.T.R. office said.

In March, the Trump administration imposed tariffs on imports of steel and aluminum from Russia, China, and India.

China had vowed earlier on Friday to strike back quickly if the United States hurts its interests.

"Trade between our nations, however, has been very unfair, for a very long time", Trump said Friday. That's why Trump thinks the US trade deficit is so large.

The deal, first announced in October 2016, has been held up for months amid trade talks between the United States and China.

But as it turns out, that's exactly what China did. The United States now dominates those industries, but Chinese government support could make it hard for USA companies to compete.

The list is meant to minimise the impact on USA consumers and businesses by selecting goods where there are ample alternative supplies from other countries.

The USTR official said the tariffs were aimed at changing China's behavior on its technology transfer policies and massive subsidies to develop high-tech industries.

For example, President Trump complains that the European Union imposes a 10 percent tariff on us -made cars, while the usa imposes a 2.5 percent tariff on foreign-made cars. Even if the USA duties reach the full $150 billion, they estimated it would shave well under a half-percentage point off China's annual growth rate, which could be offset by fiscal and monetary policy actions.

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